The results represent 100 per cent of the revenue target and 111 per cent of the profit target for FY2018. Online revenue was VND12.3 trillion ($529.8 million), or 14.3 per cent the total.

Online turnover rose 116 per cent year-on-year and represented 123 per cent the target. With three websites meeting mobile phone shopping, consumer electronics, and FMCG demand (thegioididong.com, dienmayxanh.com and bachhoaxanh.com), MWG made the greatest contribution to Vietnam’s total online retail sales value during the year.

Its Dien May Xanh (DMX) chain contributed 55 per cent of net turnover, followed by The Gioi Di Dong (TGDD) with 40 per cent and Bach Hoa Xanh (BHX) with 5 per cent. By category, mobile phones, tablets, laptops and accessories (Phones) accounted for approximately 53 per cent of MWG’s net revenue as the product group is sold at both TGDD and DMX stores. Following was electronics, white goods and small appliances (Consumer electronics, or CE) with 37 per cent, then Fresh foods and FMCGs (Grocery), which contributed 5 per cent of net turnover. The remaining 5 per cent belonged to other products and services.

As at December 31, MWG had 750 CE retail stores, an increase of 108 stores compared to the end of 2017, thanks to: (1) new openings of DMX and DMX mini stores, (2) conversion of some TGDD stores, and (3) consolidation of TAG. The conversion of TGDD stores to DMX or DMX mini by expanding areas and adding consumer electronics SKUs (Stock-Keeping Units) allowed the post-conversion stores to record an average of 50 per cent revenue growth compared to their previous performance.

To be considered for the conversion, a TGDD store must meet the following criteria: (1) earn high revenue; (2) be located in areas with a low density of modern CE retail stores; and (3) have the possibility to negotiate with surrounding landlords for expansion.

In the fourth quarter of 2018, MWG experimented in changing the DMX mini’s store layout to optimize the number of SKUs and the size of the product display area. This breakthrough initiative helped MWG proactively boost sales of good-performing stores (with monthly turnover from VND6 billion ($258,470) and above) located in high potential areas but without the opportunity for space enlargement.

These stores recorded 30 per cent revenue growth while their rental and operating expenses remained almost unchanged. The aggressive roll-out of this optimization effort will be an important contributor to MWG realizing its challenging 2019 business plan.

From 283 old-format stores at the end of 2017, BHX had 365 new-format stores, equivalent to 90 per cent of the total of 405 stores in operation, as at December 31, thanks to new openings and conversions from old-format stores. The new-format stores include: (1) standard “fresh meat - live fish” stores and (2) large-scale (300 sq m) stores. The conversion is expected to be fully completed in the first quarter of this year.

BHX has significantly improved its efficiency since MWG implemented the strategic changes last April, including: (1) relocating stores in small alleys in residential areas to new locations on more crowded and larger streets; (2) refining the standard format focus with a diversified product assortment; (3) piloting the large store concept and expanding the standard format to neighboring provinces; and (4) reviewing performance and closing underperforming stores.

As a result, average Monthly Sales per Store was over VND1.2 billion ($51,650) in December 2018; almost double the revenue recorded in March 2018. The average full-year gross margin reached 16 per cent against 12 per cent in 2017. Fresh foods contributed about 40 per cent of BHX’s total sales and acted as a traffic driver for each BHX store to conduct 500 transactions on average per day. BHX had successfully achieved a break-even EBITDA (earnings before interest, taxes, depreciation and amortization) at the store level by the end of the year.